Under the British Nationality Act 1981, a resident of the Falkland Islands was classed as a British Dependent Territories citizen unless they also had a connection with the United Kingdom (UK) itself (such as through having a UK-born parent or grandparent). British Dependent Territories citizens were restricted in their right to enter and stay in the UK. The new Act conferred full British citizenship on the residents of the Falkland Islands, giving them similar status to that of citizens in Gibraltar. The 1983 Act had retrospective effect from 1 January 1983, the date on which the 1981 Act had come into effect.

The 1983 Act was passed mainly in response to the Falklands War, which was fought between the United Kingdom and Argentina over the sovereignty of the islands. The United Kingdom maintained that it would stand by the principle of self-determination of allowing the Falkland Islanders to decide their own destiny. It had been argued[by whom?] that the British Nationality Act 1981 had indicated British reluctance to hold the islands, as the residents were not legally full British citizens, and after the war ended in victory for the British, the 1983 Act was passed to clarify the United Kingdom's commitment to the islands.